A report from the Treasury Inspector General for Tax Administration estimated that computer programming woes cost the country more than the $200 to $300 million originally estimated by the Internal Revenue Service.The inspector general's report estimated that the agency doled out approximately $318 million in improper refunds this tax season because a computer-based screening system was not in place. The IRS had contracted with Computer Sciences Corp. to update software in place since 1996, but the company was unable to produce a working program by the spring tax-filing deadline - despite a $20 million budget.

TIGTA's report outlined recommendations to address several findings, including that:

* The project didn't have adequate executive oversight;

* The system risks were not effectively managed;

* Contractor performance was not effectively monitored; and,

* Performance-based contracts were not used.

The refund fraud program stopped $412 million in fraudulent returns in 2005, running an automated check on any return claiming a refund. The inspector general said that by using other methods to review claims, the IRS stopped about $94 million in fraudulent returns for 2006.

The inspector general plans a future study to look more closely at the amount of money the government lost, along with IRS procedures for detecting fraudulent refunds.

The full report is available online at www.treas.gov/tigta/auditreports/2006reports/200620108fr.pdf.

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